Harshad and his associates triggered a securities scam diverting funds to the tune of Rs4000 crore (Rs 40 billion) from the banks to stockbrokers between April 1991 to May 1992.

A Special Court also sentenced Sudhir Mehta, Harshad Mehta’s brother, and six others, including four bank officials, to rigorous imprisonment (RI) ranging from 1 year to 10 years on the charge of duping State Bank of India to the tune of Rs 600 crore (Rs 6 billion)

Animal Husbandry Department of Government of Bihar in which irregularities of nearly Rs 950 crores (US $ 210 million) were detected.

The scam was unearthed in 1996 during the regime of chief minister Lalu Prasad Yadav, but it goes back to 1980s and is believed to have started during tenure of Jagannath Mishra Lalu had ordered probe into these massive irregularities in accounts by constituting a committee.

Ketan borrowed Rs 250 crore from Global Trust Bank to fuel his ambitions. Ketan alongwith his associates also managed to get Rs 1,000 crore from the Madhavpura Mercantile Co-operative Bank.

According to RBI regulations, a broker is allowed a loan of only Rs 15 crore (Rs 150 million). There was evidence of price rigging in the scrips of Global Trust Bank, Zee Telefilms, HFCL, Lupin Laboratories, Aftek Infosys and Padmini Polymer.

9. Cobbler scam

Sohin Daya, son of a former Sheriff of Mumbai, was the main accused in the multi-crore shoes scam.

Daya of Dawood Shoes, Rafique Tejani of Metro Shoes, and Kishore Signapurkar of Milano Shoes were arrested for creating several leather co-operative societies which did not exist.

They availed loans of crores of rupees on behalf of these fictitious societies. The scam was exposed in 1995.

Officials of the Maharashtra State Finance Corporation, Citibank, Bank of Oman, Dena Bank, Development Credit Bank, Saraswat Co-operative Bank, and Bank of Bahrain and Kuwait were also charge sheeted.

10. Dinesh Dalmia

Dinesh Dalmia was the managing director of DSQ Software Limited when the Central Bureau of Investigation arrested him for his involvement in a stocks scam of Rs 595 crore (Rs 5.95 billion).

Dalmia’s group included DSQ Holdings Ltd, Hulda Properties and Trades Ltd, and Powerflow Holding and Trading Pvt Ltd. Dalmia resorted to illegal ways to make money through the partly paid shares of DSQ Software Ltd, in the name of New Vision Investment Ltd, UK, and unallotted shares in the name of Dinesh Dalmia Technology Trust.

Investigation showed that 1.30 crore (13 million) shares of DSQ Software Ltd had not been listed on any stock exchange.

Virendra Rastogi chief executive of RBG Resources was charged with for deceiving banks worldwide of an estimated $1 billion.

He was also involved in the duty-drawback scam to the tune of Rs 43 crore (Rs 430 milion) in India.

The CBI said that five companies, whose directors were the four Rastogi brothers — Subash, Virender, Ravinde and Narinder — exported bicycle parts during 1995-96 to Russia and Hong Kong by heavily over invoicing the value of goods for claiming excess duty draw back from customs.

13. The UTI Scam

Former UTI chairman P S Subramanyam and two executive directors — M M Kapur and S K Basu — and a stockbroker Rakesh G Mehta, were arrested in connection with the ‘UTI scam’.

UTI had purchased 40,000 shares of Cyberspace between September 25, 2000, and September 25, 2000 for about Rs 3.33 crore (Rs 33.3 million) from Rakesh Mehta when there were no buyers for the scrip. The market price was around Rs 830.

The promoter of Cyberspace Infosys, Arvind Johari was arrested in connection with the case. The officals were paid Rs 50 lakh (Rs 5 million) by Cyberspace to promote its shares.

He also received Rs 1.18 crore (Rs 11.8 million) from the company through a circuitous route for possible rigging the Cyberspace counter.

14. Uday Goyal :: Plantation firms’ scam

Since few firms in mid-90s were subject to no guidelines, the plantation companies during that time also got away with profit protrusions.

The plantation firms projected themselves as a part of IPO and assured massive returns.

The investors were lured and the companies accrued profits from fake campaigns of around Rs 8000 crores plus.

www.outlookindia.com | Scam India: While the Jain hawala case, the fodder scandal in Bihar and the ‘housing scam’ hog the headlines, other instances of politicians, bureaucrats and businessmen getting caught with their hands in the public till are surfacing across the country. All this seems to justify the popular perception that corruption has got ingrained in our system. Ajith Pillai looks at some of the lesser known instances of misappropriation of public money.

37. ASSAM has never really been on the scam map of India. But the unearthing of the Rs 200 crore fraud in the state’s Veterinary Department, popularly referred to as the Letter of Credit (LOC) scam, has rocked Hiteswar Saikia‘s Congress government and its echoes are being heard as far away as New Delhi. Though no public figure has been implicated so far, over 30 officials from senior directors to minor functionaries have been either arrested or suspended. More heads are likely to roll as the CBI and the state police continue their investigations into what is being referred to as the biggest scam in the North-east.

In a nutshell, the LOC fraud relates to the blatant misuse of letters of credit by officials of the state Veterinary Department since 1985. The LOC is a regulatory mechanism devised by the state government to keep expenditure under control. When the Government earmarks, say, Rs 10 crore fora project, the entire amount is not handed over to the department concerned in one go. It is released in phases and LOCs are issued, which can be cashed when required. The system was introduced in Assam a few years ago.

But now it has come to light that the LOC facility was subverted and money to the tune of Rs 200 crore fraudulently withdrawn from government treasuries under the pretext of implementing welfare programmes.

According to estimates by investigating officials, of the 63 treasuries in the state, 19 have been tainted by the scam.

38.

IT may have been with tears in her eyes that R. Indirakumari, Tamil Nadu’s minister for handloom and social welfare, declared to the press that her ministry was in no way involved in the Rs 50-crore dhoti-saree scandal. But her emotional outburst has done little to clear the air and the Jayalalitha government in Tamil Nadu is extremely embarrassed that its much publicised ‘clothing for the poor’ scheme stands tainted because of a fraud perpetrated by persons closely connected to those in power.

At the centre of the controversy is Venkatakrishnan, personal secretary to Indirakumari. It was he who first mooted the idea in 1993 that yarn for the ‘clothing for the poor’ scheme could be procured from sources other than state government-approved cooperative mills. This change in the procurement policy led to a massive fraud where bills and invoices were raised for yarn which was not spun in the first place. Says DMK President M. Karunanidhi: “It is shameful that false invoices were used to loot the state exchequer. What is even more shameful is that the scheme for the poorest of the poor was misused.”

The scam came to light when the DMK secretary of Periyar district, N.K.K. Periasami, was issued a summons on February 6 from the superintendent of central excise, Coimbatore, in connection with certain dealings of Sri Karunambika Enterprise, a firm dealing in sugar run by Periasami and two of his sons.

At the excise office, it was revealed that the firm’s name and sales tax registration number were being misused and fake letterheads had been printed to show the purported sale of yarn worth Rs 97.50 lakh to the state-run Tamil Nadu Textile Corporation (TNTC), Coimbatore. The sale took place on August 11, 1995. Later an account was opened in the name of Sri Karunambika Enterprise in the Coimbatore branch of a nationalised bank and a total of Rs 96.85 lakh was withdrawn on various dates.

Periasami’s further enquiries to the TNTC elicited the reply that the entire sale was a mistake and that he was not on the list of suppliers of yarn to the Corporation. On perusal of the official list, it was discovered that all 17 firms supplying yarn to the TNTC were non-existent.

The scamsters operated at various levels. The TNTC on its part was buying non-existent yarn, which for the books it claimed it was supplying to bogus non-weaver members of government handloom cooperatives who did not even own looms. They, in turn, were weaving sarees and dhotis from all the yarn which they were not supplied with. In 1994 alone, the TNTC procured 110 lakh bundles of imaginary yarn. In all, in the last two years, close to 200 lakh bundles were thus bought.

So, where did the sarees and dhotis distributed every year at Pongal, the Tamil new year, come from? They were bought from the open market in Tamil Nadu and Andhra Pradesh and sold to the Handloom Department and the TNTC at highly inflated prices. In 1993, sarees and dhotis worth Rs 18 crore were sourced from 14 such bogus suppliers. The following year, according to income-tax officials, cloth for stitching uniforms for children worth Rs 7.87 crore was procured from a nonexistent weaving outfit. Last year, Rs 2.07 crore worth of sarees and dhotis were provided by three fictitious companies.

All the transactions were conceived so that no rules governing the procurement of cloth for the free distribution scheme were seen as being violated. The scheme introduced by MGR in 1978 was meant not only to clothe the poor but also to help marginal weavers. The government rules have clearly laid down that the dhotis and sarees have to be sourced from weavers who are members of state-approved cooperatives and the yarn procured from cooperative spinning mills.

The state government has been strangely silent on the entire issue and Indirakumari is under pressure to resign. Speculation is rife in Madras that she may be asked to quit by the chief minister.

39.

A table, a typewriter and a bunch of fake bills is the prescription for success in central Bombay’s medicine market or Dava Bazaar. This spirit of enterprise is at the centre of a multicrore bogus billing racket in the pharmaceutical industry. It came to light when tax officials came across inflated bills in the course of a recent search and seizure operation. This led them to the pharmaceutical companies involved and from there to the streets of Dava Bazaar where companies are run from a single table.

The fraud involves 16 companies which manipulated a bogus Rs 112 crore turnover through inflated bills. In some cases the bogus bills showing a high sales turnover were motivated by plans to go public. Others were trying to reduce their taxable income by inflating purchases made. Raids conducted by the Income-Tax Department’s investigation wing in Dava Bazaar revealed that 11 companies were issuing bogus bills after charging a commission ranging from 5 per cent to 6 per cent for their services. Seven of these existed on letterheads printed by one of the accused, F.H. Rizvi. Another proprietor, Jhaveri, has letterheads of three drug companies involved in the bogus trade. Directors of the pharmaceutical companies involved have admitted to bogus sales.

40.

Yugoslav Dinar Scam: The Enforcement Directorate in Bombay recently busted a 560 billion Yugoslav dinar racket and arrested five persons involved. Information given by some Vysya and UCO Bank officials revealed that 560 billion dinars—worth Rs 400 crore—had come in through the hawala channel and efforts were being made to transfer the amount to a bank account in the Bahamas. The amount was acquired by Yogesh Mehta and Dinesh Singh by way of compensatory payments against the import of electronic goods.

A third person, Rohit Mody, who was trying to deposit the money in a Bahamas bank, said he had received some of the money in Singapore and Los Angeles. Another accused, Satish Barot, confessed he wished to open a restaraunt in the Bahamas with his share of the profit.

41.

IT was Food Minister S.K. Katare who—much to the great embarrassment of Chief Minister Digvijay Singh—took the lid off what is being referred to as the rice scam. According to officials in Bhopal, the fraud was detected at the food controller’s office in Raipur, which is considered to be the state’s rice bowl.

Under the state’s levy scheme, about one lakh tonnes of rice had been cleared for export in the past year or so. According to paddy distribution rules in the state, a producer is expected to sell 40 per cent of his produce to the district administration and the rest at the mandi of his choice after paying a levy.

Preliminary investigations reveal that in most cases almost 100 per cent of the total produce was palmed off to rice-buying companies that existed only on paper. These firms are reportedly the fronts for various influential rice traders in the region. What’s more, these fictitious companies had been issued levy paid certificates (LPCs). Sources in the food office in Bhopal claim that in the last few years LPCs have been issued for as many as six lakh tonnes of rice while the actual levy paid does not exceed that for more than two lakh tonnes.

On Katare’s instructions, on February 16 the food controller’s office was sealed. A special investigation has been launched by Katare, headed by his key aide Hiralal Dwivedi, who is camping in Raipur along with some officials. According to sources, this team has already prepared a list of LPCs issued during the tenure of food controller H.P. Saxena. Also under investigation are the ‘firms’ which were shown to have bought the rice and the quantity of rice given by these firms to the Food Corporation of India (FCI), which also procures paddy from the firms listed by the district administration. Sources indicate that the number of these firms could tip the 100 mark.

The scam has not yet been exposed and the government is trying to dismiss it as a non-issue. Digvijay Singh told Outlook that too much is being made of the rice scandal. “I too have read about it in the papers, but there seems to be too much noise without any real substance,” he said. He downplayed the issue further, insisting it’s a matter to be handled by the district administration.

But many observers here say that the rice scam has all the potential to snowball on the chief minister, who is alleged to be involved in the dealings. Heading the tirade is BJP legislator Brijmohan Agrawal, who raised the issue in the state assembly. Agrawal, who claims to know the rice trade inside out, says he has information which he will use to his party’s advantage. Though it remains to be seen if the BJP can extract any significant mileage out of it, unfortunately for the chief minister, the BJP MLA’s efforts seem to be getting bolstered by Katare.

42.

AFTER months of suspense during which rumours flew thickand fast in the state, the Orissa Vigilance Department finally filed chargesheets against former chief minister and veteran Janata Dal leader Biju Patnaik under the Prevention of Corruption Act on February 28. He was charged with “abusing his official position, resulting in pecuniary advantage to Ballarpur Industries”—i.e. granting concessions on bamboo royalty to the Thapar Group-owned company in 1992, during his tenure as chief minister.

The specific allegation was that Patnaik had granted a concession of Rs 100 per tonne of bamboo for seven years. The chargesheet said the state incurred a loss of Rs 7 crore because of this. Central to the allegations against Patnaik is that he allegedly favoured this particular company because both his wife, Gyan Patnaik, and his son, Prem Patnaik, had “business interests” in, and financial transactions with, Ballarpur Industries and the Thapar group.

According to the chargesheet, the concessions were granted for seven years in violation of the National Forest Policy, which prohibits any concession on forest produce. It further states that officials in the state forest and industry departments, including the nodal committee headed by the Orissa chief secretary, had opposed the then chief minister’s decision to grant these “favours” but their advice was not heeded. Patnaik is also charged with having ignored notes issued by the forest and industry ministers of his cabinet stating that the concessions would result in huge losses to the exchequer.

Patnaik, in his defence, claims the favours granted by him were intended only to revive the Thapars’ “ailing paper mills”. But the Vigilance Department says the Board for Industrial and Financial Reconstruction, whose job it is to recommend such measures for sick units, had not suggested any concessions to pull the mills out of the red. The alleged “favours” made by Patnaik were for the purported rehabilitation of the Sewa Paper Mills in Koraput and the Titagarh Paper Mill at Choudwar.

The Janata Dal sees the entire episode as an effort that is politically motivated to discredit a senior leader like Patnaik.

To make matters worse, within the week the Vigilance Department filed another chargesheet against Patnaik, alleging that he used the Janata Dal party account as his own and possessed assets disproportionate to his income.